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4 Different Ways to Track Your Spending

When it comes to achieving your financial goals, living on a budget and tracking your spending is key. It doesn’t really matter if your goal is to save up for retirement, put money away for a large purchase, or if you are working your way out of debt, tracking your spending is the best way to make consistent progress month after month on all of these goals.

Here in the PF community we talk a lot about why it’s a good idea to track your spending, but we don’t often discuss all the different ways you can go about it. Here are just a few methods I’ve used to track my own spending:

Go Old School

When I first started tracking my spending and building a budget, I used to do all of it on paper by hand! This might seem crazy but it worked for me at the time. Now that my spending and budget have gotten more complex because I’m married, we have student loans to keep track of, and we have pet and kid expenses, we’ve gotten away from this method.

Use Cash Only

Doing all of your variable spending for things like groceries, personal care items, and entertainment with cash is one of the most popular and highly recommended ways of tracking your spending. Thanks, Dave Ramsey! This is because you don’t have to actually track every penny you spend if you take the cash out at the beginning of the month and don’t ever swipe your card. Instead of having to record every penny you spend, you simply spend cash out of each category’s envelope. Once the cash is gone, it’s gone, and you can’t spend any more in the category. This tracking method can force you to become creative if you run short on money toward the end of the month.

Virtual Envelopes

Some people like the idea of an envelope system, but they dislike the bulk or the hassle of using cash. For those people an online envelope system, like Budget Ease, may be the best choice for tracking spending. The Budget Ease software can do so many things to make your life easier, like tracking your spending in each category you set up, predicting your savings rates over time, and reminding you via text or email when you’re getting low on money in one of your categories.

Online Banking

Another way I track some of my spending is by using my bank’s online transaction records. I can easily check my account balances, transfer money around with same day arrival, view copies of checks I’ve written, and sign up for automatic bill pay from my institution’s online banking system. This is a great way to keep track of your spending without having a huge pile of receipts to go through at the end of the month.

Trying out different methods of tracking your spending is common. The method you like best may even change over time as life throws you curveballs. Right now, using a combination of these methods is what works best for my family and my business.